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Analysis

Big Infrastructure Projects: Coming Soon

By Lorenzo Núñez | Thu, 07/01/2021 - 15:27

Federal infrastructure projects have always served as a cornerstone to attract investment to the country, whether to support these works or to grow industries and initiatives that needed this infrastructure. Massive projects are coming to Mexico with the intention of improving tourism, transportation, development and general quality of life for the general population. Some of these, however, are still facing delays and/or controversies. Companies involved have been subject to scrutiny following events like that of Line 12 of the Metro system, while other projects like the Mayan Train have faced legal suspensions stemming from complaints from local communities presented to the Supreme Court. Should the projects come to fruition in the way they are forecast, they are sure to have a major impact in multiple industries.

Interoceanic Multimodal Corridor of the Isthmus of Tehuantepec

In the eyes of the project’s manager, Rafael Marín Mollinedo, the Program for the Development of the Isthmus of Tehuantepec has the objective of growing the regional economy, always respecting the history, culture and traditions of the Oaxaca and Veracruz Isthmus. According to Marín, the last 40 years have created substantial social and economic inequality in the area. To counter this, President López Obrador’s administration proposes to use public investment to create conditions that will attract private investment for the benefit of the region's inhabitants.

The entire project includes the modernization of the Isthmus of Tehuantepec railroad, the modernization of the ports of Coatzacoalcos and Salina Cruz, the strengthening of highway and rural road infrastructure, as well as the construction of a gas pipeline to supply businesses and domestic consumers. In addition, an optic fiber line will be laid throughout the Isthmus to strengthen digital connectivity in the region for the benefit of companies and communities that currently lack internet service.

The project will also bring benefits in terms of logistics operations. Today, crossings between the Atlantic and the Pacific coasts take between 13 and 44 percent more time through the isthmus, against the Panama Canal, due to the abandonment of routes. In terms of cost, crossing through Mexico is between 7 and 34 percent more expensive. "That is why it is necessary to modernize the infrastructure," stated Marín. “Even with an expansion to the Panama Canal, an additional inter-oceanic crossing is required. The Tehuantepec Corridor can be competitive against the canal with the necessary infrastructure works.” The true impact and cost benefits are yet to be determined, however.

During a visit to the Tehuantepec railroad track, President López Obrador informed the project will have an initial investment of more than US$146 million and a total investment of nearly US$1 billion, as long as the project is not delayed. “We will not leave this work unfinished; we will have the necessary budget to finish this work. We have to finish the entire isthmus project by 2023, at the latest,” he said.

Intercity Toluca-Mexico Valley Passenger Train

A major infrastructure project that has been setback multiple times is the intercity passenger train connecting Toluca and Mexico City. The concept behind this project is a fast and comfortable means of transportation that will serve over 230,000 passengers per day. It will have a total length of 57.7km and six stations: two terminals and four intermediate stations. The original plan was to inaugurate the project in 2018, but administration changes and setbacks have delayed it. Currently, the work has a total progress of 90.6 percent. Of the three sections of public works, the first two (located in the State of Mexico) have a progress of 94 percent while the third (located in Mexico City) has less than 40 percent. However, Mexico City’s Major Claudia Sheinbaum has expressed her administration’s interest in finishing the project. Furthermore, the Minister of Communications and Transportation, Javier Jiménez Espriú, stated that the Mexico City-Toluca intercity passenger train will be ready to enter commercial operations from Zinacantepec to Observatorio by the end of 2022, one year after the Zinacantepec-Santa Fe section is completed.

AIFA Airport

While surrounded by controversy, the new airport is expected to reduce flight times for aircraft operating in the Mexico City metropolitan area by 16 percent, resulting in predictable timing and greater efficiency in arrivals and departures, along with reduced operational delays. This will also increase airspace capacity and will lead to a reduction in fuel consumption, pollutant gas emissions and interactions and workload for pilots and air traffic controllers, according to the government. However, there are challenges regarding the redesigned airspace. “The new airport requires a new airspace design with new trajectories that must be traced out and tested. There will be major challenges, such as mobility or how to operate an airport network of three airports: AICM, Toluca and Santa Lucia. We know that there is criticism of the reconfiguration but airspace should not be an impediment. There are ways to organize all this: there is technology and there are places in the world that are more complicated. With willpower, it can be solved,” said Rafael Echevarne, General LATAM Manager of the Airport Council International (ACI), according to a previous MBN article.

Connectivity is another issue to address for the airport to properly serve the Mexico City metropolitan area. The Santa Lucia project is far away from Mexico City at 45km from AICM, according to official government data. Currently, a trip from AICM to AIFA can take between 50 minutes and an hour and a half in a private car, while getting there through public transport can take up to two hours depending on traffic and the route chosen. However, the government has a plan to decrease the travel time with different infrastructure projects. During a morning press conference, President Andrés Manuel López Obrador and representatives of SEDENA and SCT said that connectivity works will be carried out in the metropolitan area, including the expansion of roads and Metro, Suburban Train and Mexibús lines, as well as the improvement of a Modal Transfer Center (CETRAM), among other projects. Read more on this topic in Mexico Business News.

Mayan Train

The Mayan Train is set cover a distance of approximately 1,500km, crossing the states of Chiapas, Tabasco, Campeche, Yucatan and Quintana Roo. The main objective of this massive project is to promote economic growth in the country’s southeast. The train is also expected to boost tourism numbers by promoting underdeveloped and often marginalized areas. President López Obrador said during a visit to the archaeological site of Chicanna in Xpujil, Campeche, that this new project will not only connect five southeastern states but will also allow millions of foreign tourists to visit the region's archeological and cultural sites, without affecting the environment. “Those who visit us from other countries can know, going into the southeast, our great cultural, artistic and archaeological wealth,” said the president.

Carina Arvizu, Director of Mayan Train Urban Development, said the project’s construction would pull 1.1 million people out of poverty in the region. She also said average schooling levels would increase by two grades. By 2023, the Mayan Train would generate an economic benefit for the Yucatan peninsula of almost US$774 million, according to Arvizu. This figure could increase to over US$7 billion by 2050. In addition, FONATUR’s calculations show the train has so far created 40,000 jobs. By 2030, Arvizu expects that number to increase to 715,000 people employed in the construction, operation and maintenance of the Mayan Train’s 1,555km of rail lines and 19 stations. You can read our in-depth analysis here.

During a visit to Section 3 of the Mayan Train, in the municipality of Maxcanú, President López Obrador called on the companies in charge of construction to speed up the work to complete the project by the end of 2023. "We have to do it before 2024. We will not flag the first train to leave the terminal station in September 2024, no, no. The trains have to be ready by 2023, at the latest. We have to signal the first operational trip by the end of 2023," he emphasized.

Dos Bocas Refinery

The objective of this project is to achieve, in the medium-term, self-sufficiency in the production of gasoline and diesel and thus offer better prices to consumers. Currently, Mexico imports over 80 percent of the fuel it consumes. This means that consumers end up paying part of the price for these imports. It also means that the Mexican government is unable to fully control fuel prices, meaning that campaign promises cannot be kept. According to the Mexican government, the new refinery in Dos Bocas, Tabasco, will have a capacity of 340Mb/d. President López Obrador's mega-project has a projected cost of US$8.995 billion, with US$2 billion already spent in 2021. The completion date is 2022, including tests and equipment checks that can take three to four months, stated in a tweet the Minister of Energy, Rocío Nahle, in May 2021.

Chapultepec Forest, Nature and Culture Project

This is a new ecological, artistic and cultural space in Mexico City that will inaugurate the fourth section of Chapultepec Forest, increasing its extension to 800 hectares. As stated by the president during a morning press conference, "It will be the largest and, of course, most important artistic-cultural space in the world. There will be four sections because on the integration of what used to belong to the Ministry of Defense, where the old weapons factory was located, will be added. Everything is integrated and there are about 800 hectares," he said.

During a supervision visit, Sheinbaum stated that "the ecological restoration implies reforesting with endemic species, while restoring water supply at the Third Section of the Chapultepec Forest. This is fundamental for the entire city, not only for filtration to aquifers but also for the restoration of rivers and streams that run through this section of the forest." The restoration project has no official termination date but the project is set to receive an investment of US$1.5 million to intervene 40ha, according to the government’s website.

Results Uncertain but Hopeful

There are still some controversial setbacks looming over some of these projects, however, which threatens to leave these initiatives as unfulfilled promises. The Mayan Train, for example, has faced many legal suspensions, while the involvement of the Carso, Alstom, and Ingenieros Civiles Asociados (ICA) consortium has also raised eyebrows due to its connection to the construction of the recently collapsed Metro Line 12. AIFA has also had its share of controversies revolving around its true cost and those related to the cancellation of NAIM, which were released and then corrected by the Superior Audit Office of the Federation (ASF), as reported by Mexico Business News. Nevertheless, the positive impacts of these projects are always good news to hear.

 

The data used in this article was sourced from:  
MBN, Gobierno de Mexico
Photo by:   sasint
Lorenzo Núñez Lorenzo Núñez Junior Journalist & Industry Analyst